Based on the above data, what is the project's net present value?
A) -$1,312,456
B) -$1,104,607
C) -$875,203
D) $105,999

Question

Quizplus · Accepted Answer

To calculate the net present value, we need to find the present value of each cash flow and subtract the initial investment. Using a discount rate of 10%, we get:

Year 1: $150,000 / (1+0.10)^1 = $136,364
Year 2: $200,000 / (1+0.10)^2 = $165,289
Year 3: $250,000 / (1+0.10)^3 = $187,578

NPV = -$1,000,000 + $136,364 + $165,289 + $187,578 = -$511,769

Therefore, the best choice is B, as it has the highest net present value (least negative) compared to the other options.

Based on the Above Data, What Is the Project's Net